Target: Vatterott Educational Centers Inc.
Sponsor: TA Associates
Seller: Wellspring Capital Management
Financial Adviser: Seller: BMO Capital Markets
Legal Adviser: Sponsor: Goodwin Procter LLP; Seller: Paul, Weiss, Rifkind, Wharton & Garrison LLP
Wellspring Capital executives declined to discuss the exact return multiple, but the firm in a May refinancing recouped all of the $40 million equity investment it made in 2003 in a $105 million deal to buy the company, according to CapitalIQ. “This has been a very successful exit for Wellspring,” Josh Cascade, a partner at the New York-based buyout shop, told Buyouts. Terms of the sale to TA Associates, which is expected to close in the fourth quarter, were not released.
Asked why Wellspring Capital would sell the company in such a poor M&A market, Cascade cited the length of the firm’s ownership, the company’s expansion from a small family-owned enterprise to a leading platform in the education industry, and growth prospects. “We enjoyed significant growth, but there were still good prospects for the buyer as well,” Cascade said. Wellspring Capital’s previous exit came in 2007 when it sold 67 percent stake in VISTAR Corp., a Centennial, Colo.-based foodservice distributor, to
Cascade said the firm improved the company during its ownership by renovating and expanding its campuses and by expanding the number of programs it offers. When Wellspring Capital bought the business most of its courses were geared toward information technology, HVAC repair, and plumbing; 80 percent of the students were male. Today Vatterott Educational Centers also trains people for jobs in health care, culinary arts, and court reporting, and its student body is split evenly between males and females, Cascade said. The company serves more than 7,500 students on 22 campuses across nine Midwestern states.
Cascade, William Dawson, managing partner, and Millet Bartoul, associate, oversaw the deal for Wellspring Capital.
For TA Associates, the investment marks a return to a sector where it has already seen success. The Boston-based firm earned a strong multiple on its investment in Florida Career College, which it sold to